Minister for Finance and President of ECOFIN, Pierre Gramegna, attended the European Parliament plenary session meeting on 8 September 2015 in Strasbourg, to present the position of the Council on the draft EU Budget for 2016. The position, adopted by the Committee of Permanent Representatives of the Members States to the EU on the basis of a compromise agreement brokered by the Luxembourg Presidency on 9 July 2015 was unanimously approved by the Council on 4 September.
Pierre Gramegna noted that although the EU Budget 2016 is intended to "reflect European solidarity, both within the Union, and beyond its borders", its main objective is to "support economic recovery, investment and boost employment, while stimulating the financing of migration policy and EU external action". The Council's position provides for EUR 153.27 billion in funding commitments and EUR 142.12 billion in payment allocations.
By way of an introduction, Pierre Gramegna emphasised "the support from the EU alongside the initiatives taken by Member States" in relation to migratory pressure on Europe, which he described as a "tragic situation... with tens and tens of thousands of refugees who have fled war and placed all their hope in Europe".
The Minister reminded the Parliament that the two major shared management funds, AMIF (Asylum, Migration and Integration Fund) and ISF (Internal Security Fund) were granted in the amount of EUR 1.3 billion and EUR 3.7 billion respectively, for 2014-2020. Pierre Gramegna also indicated that, in 2015, more than 45 national programmes have been approved, amounting to just over EUR 1 billion in commitments, and that just over EUR 210 billion in pre-financing has already been allocated by the Commission. Under the Emergency Aid component of both funds, almost EUR 60 million has been allocated, added the Minister, noting that the Council and the European Parliament approved the European Agenda on Migration for improved management of migration flows, along with Amending Budget 5 for that purpose, in May 2015.
Lastly, Pierre Gramegna stressed that the EU is "one of the main donors in the region bordering Syria", with EUR 855 million in humanitarian aid having been allocated to refugees from Syria, Lebanon, Jordan and Turkey for 2016. In addition, commitments in the amount of EUR 150 million for the relocation of 40,000 refugees in Greece and Italy have been accepted by the Council.
Pierre Gramegna then briefly outlined the main principles guiding the work of the Council. In its position, the Council included the necessary allocations to implement the agreement on the payment plan for 2015 and 2016, in order to resolve outstanding payments by the end of 2016, stated the Minister. Secondly, the Council accepted in full the allocations earmarked for the European Fund for Strategic Investments for 2016, as a "number one priority", according to the Minister. Regarding migration policy, significant funding will be allocated, with a 35 % increase in the funding allocated to AMIF in relation to 2015 (+ EUR 515 million). The same is true for humanitarian aid, with a 16 % increase in payment credits to over EUR 1 billion in relation to 2015.
With regard to reductions of appropriations accepted by the Council, they have been finalised on the basis of specific criteria such as the state of progress of policies and projects, past and expected implementation rates, as well as forecasted and likely absorption capacities, further stated Pierre Gramegna. Furthermore, the budget headings that were adjusted by the Council are mainly those for which the Commission proposed significant funding increases compared to 2015, the Minister noted, stating that despite the reductions introduced by the Council, the increase in allocations for 2016 will "remain substantial".
Lastly, in the context of the "political instability in the EU neighbourhood ", the Council took the view that "it is essential to reach a balanced and responsible compromise", and sought to leave "sufficient margins" in order to respond to unforeseen developments during the financial year 2016, Pierre Gramegna explained.
The Council's position
In its position, which provides for EUR 153.27 billion in commitments and EUR 142.12 billion in payments, the Council accepted an increase in payments of 0.6 % compared with 2015 (that is to say EUR 839 million). With regard to commitments, the Council foresees a reduction of - 5.4 % (EUR 8.7 billion) in relation to 2015, compared with the - 5 % proposed by the Commission in its draft budget. This should contribute to narrowing the gap between commitments and payments, and therefore outstanding amounts, as well as reducing the risk of outstanding payments.
The Minister went on to detail the various headings of the draft EU budget 2016 adopted by the Council.
Regarding "competitiveness for jobs and growth", which is "at the heart of" political priorities for investment and employment according to the Minister, the Council opted for an 8.6 % increase in payments in relation to 2015 (i.e. + EUR 1.4 billion) and 7 % in commitments (+ EUR 1.2 billion).
The reductions adopted by the Council essentially relate to major infrastructure projects, in particular Galileo, ITER and Copernicus, deductions to the administrative expenses of Horizon 2020, as well as joint undertakings. Payments for the research programme will, however, increase by +9.3 % (+ EUR 840 million) in relation to 2015, to EUR 9.9 billion.
The Council has also made a "slight downward adjustment" (- EUR 21 million in relation to the Commission's draft budget) to the Connecting Europe Facility, the budget of which shall nonetheless increase by +53 % in commitments (+ EUR 760 million) and +14 % in payments (+ EUR 203 million). This is "very close" to the what the Commission proposed in its draft budget 2016, according to Pierre Gramegna.
On the other hand, the COSME and Erasmus+ programmes, which are "highly valued in Europe", were left untouched. Erasmus+ will receive funding in the amount of EUR 1.8 billion in 2016, that is to say an increase of +30 % in relation to 2015.
Under "Economic, Social and Territorial Cohesion", the Council opted for a reduction of 0.45 % in payments (i.e. - EUR 220 million), continued the Minister.
The Council also introduced a slight reduction of - 0.45 % in payments (that is to say - EUR 251 million) and - 0.32 % in commitments (- EUR 200 million) in relation to the draft budget proposed by the Commission for 2016 under "Sustainable growth: natural resources".
Under "Security and citizenship" the allocations will result in a "significant increase" in relation to 2015, stated Pierre Gramegna (+8.7 % in commitments and +15.4 % in payment allocations). "This increase applies mainly to actions in the field of migration, a political priority for the EU", he stressed, noting that the Council had also accepted the use of the flexibility instrument in this context.
As regards "Global Europe", the Minister noted that the Council has "essentially followed" the Commission's proposals. Payment allocations will increase by +22.4 % in relation to 2015 (i.e. + EUR 1.666 billion), to exceed EUR 9 billion in payments. "I wish to emphasise that the Council has agreed to the amount of allocations proposed by the Commission for humanitarian aid, civil protection, macro-financial aid to third countries, the Guarantee Fund for external actions and support for the Palestinians", he added.
Under Administrative Expenditure, Pierre Gramegna stated that the Council had opted for a moderate reduction of -31 million "which will not affect the proper functioning of EU institutions in 2016", stressing that the Council had not "amended the European Parliament's administrative budget" The Council will "remain vigilant with regard to continued staff reductions of -5 % until 2017" across the institutions. A meeting was also scheduled following the trilogue of 14 July on the budget with a view to discussing the issue with the Commission and the two branches of the budgetary authority, he stated.
The Commission's response
The European Commissioner for Regional Policy, Corina Creţu, emphasised that the Commission is "concerned" about the cuts to certain budget headings, "justified by reference to supposedly low absorption capacities". The Commission "does not share" the reasons put forward by the Council for the "substantial cuts" proposed to the Horizon 2020 programme and the Connecting Europe Facility, and is of the view that these reductions are "out of sync" with EU political priorities. The same is true of the cuts to neighbourhood policy, pre-accession, and cooperation and development programmes.
Lastly, the Commissioner recalled the efforts made by the Commission to ensure sound management and to limit administrative expenditure, expressing regret that the Council's position "appears to fail to take account of these efforts". Furthermore, she noted that following the presentation on 9 September of the Commission's proposal on the refugee crisis and the introduction of an emergency package of EUR 500 million to tackle the collapse of certain agricultural products, a letter of amendment detailing the financial impact of these measures will be submitted in October.
Response of the rapporteurs of the European Parliament
José Manuel Fernandes (PPE), Rapporteur for the Committee on Budgets (BUDG), described the Council's position as "unacceptable", "incomprehensible" and "incoherent", criticising the "EUR 1.4 billion cuts introduced by the Council in comparison to the Commission's proposal", in particular, for instruments with "good absorption capacities" such as Horizon 2020 or the Connecting Europe Facility. "This is contrary to your proposals and your priorities", he insisted.
While welcoming the improvement to the situation relating to payment allocations for 2016, Gérard Deprez (ALDE), also a BUDG Committee rapporteur, cautioned against the temporary nature of the measures, in so far as, in his view, "no structural measures have been taken to prevent the current situation recurring before the end of the current financial framework".
Furthermore, regarding the relocation and distribution of refugees across Europe, "the budget must keep up", warned Gérard Deprez, observing that if the president of the European Commission "decides tomorrow to relocate a further 120,000 people in addition to the 40,000 already provided for, almost EUR 960 million will have to be found". For the moment, the Commission has provided for an increase of EUR 169 million for migration policy compared with 2015, he observed.
Lastly, Gérard Deprez also condemned the cuts to the Horizon 2020 programme and the Connecting Europe Facility, describing it as a "serious error".